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Lenovo uses the ZX-81 chip in some of its laptop computers. The prices for the chip during the past 12 months were as follows:
PRICE FOR CHIP
a) Use a 2-month moving average on all the data and plot the averages and the prices.
b) Use a 3-month moving average and add the 3-month plot to the graph created in part (a).
c) Which is better (using the mean absolute deviation): the 2-month average or the 3-month average?
d) Compute the forecasts for each month using exponential smoothing, with an initial forecast for January of $1.80. Use a = .1, then a = .3, and finally a = .5. Using MAD, which a is the best?
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